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Thursday, March 8, 2012

Establish Goldcorp, Halliburton, and Mylan Covered Calls

Three new covered calls positions were established today. In each case, the stock was purchased yesterday and the calls were sold soon after the market opened this morning.
The transactions and possible results are as follows:


1. Goldcorp Inc.(GG)

The transactions were as follows:
03/07/2012 Bought 200 Goldcorp Shares @ $46.75
03/08/2012 Sold 2 GG Apr2012 $48.00 Calls @ $1.55
Note: the price of Goldcorp was $47.14 today when the calls were sold.

Two possible overall performance results(including commissions) for the Goldcorp Inc.(GG) transactions would be as follows:
Stock Purchase Cost: $9,358.95
= ($46.75*200+$8.95 commission)

Net Profit:
(a) Options Income: +$299.55
= ($1.55*200 shares) - $10.45 commissions
(b) Dividend Income (GG provides $.045 monthly dividends): +$18.00
= $.045 per share x 200 shares x 2 ex-div dates prior to Apr2012 expiration
(c) Capital Appreciation (If stock price unchanged at $46.75): -$8.95
+($46.75-$46.75)*200 - $8.95 commissions
(c) Capital Appreciation (If stock assigned at $48.00): +$241.05
+($48.00-$46.75)*200 - $8.95 commissions

Total Net Profit(If stock price unchanged at Apr2012 expiration): +$308.60
= (+$299.55 +$18.00 -$8.95)
Total Net Profit(If stock assigned at $48.00 at Apr2012 expiration): +$558.60
= (+$299.55 +$18.00 +$241.05)

1. Absolute Return (If stock price unchanged at Apr2012 expiration): +3.3%
= +$308.60/$9,358.95
Annualized Return (If stock price unchanged at Apr2012 expiration): +27.4%
= (+$308.60/$9,358.95)*(365/44 days)

2. Absolute Return (If stock assigned at $48.00 at Apr2012 expiration): +6.0%
= +$558.60/$9,358.95
Annualized Return (If stock assigned): +49.5%
= (+$558.60/$9,358.95)*(365/44 days)


2. Halliburton Co.(HAL)
The transactions were as follows:
03/07/2012 Bought 300 Halliburton Co. Shares @ $34.02
03/08/2012 Sold 3 HAL Mar2012 $35.00 Calls @ $.48
Note: the price of Halliburton was $34.59 today when the calls were sold.

Two possible overall performance results(including commissions) for the Halliburton Co.(HAL)transactions would be as follows:
Stock Purchase Cost: $10,214.95
= ($34.02*300+$8.95 commission)

Net Profit:
(a) Options Income: +$132.80
= ($.48*300 shares) - $11.20 commissions
(b) Dividend Income: $0.00
(c) Capital Appreciation (If stock price unchanged at $34.02): -$8.95
+($34.02-$34.02)*300 - $8.95 commissions
(c) Capital Appreciation (If stock assigned at $35.00): +$285.05
+($35.00-$34.02)*300 - $8.95 commissions

Total Net Profit(If stock price unchanged at Mar2012 expiration): +$123.85
= (+$132.80 +$0.00 -$8.95)
Total Net Profit(If stock assigned at $35.00 at Mar2012 expiration): +$417.85
= (+$132.80 +$0.00 +$285.05)

1. Absolute Return (If stock price unchanged at Mar2012 expiration): +1.2%
= +$123.85/$10,214.95
Annualized Return (If stock price unchanged at Apr2012 expiration): +44.3%
= (+$123.85/$10,214.95)*(365/10 days)

2. Absolute Return (If stock assigned at $35.00 at Mar2012 expiration): +4.1%
= +$417.85/$10,214.95
Annualized Return (If stock assigned): +149.3%
= (+$417.85/$10,214.95)*(365/10 days)


3. Mylan Inc.(MYL)
The transactions were as follows:
03/07/2012 Bought 500 Mylan Inc. Shares @ $22.51
03/08/2012 Sold 5 MYL Mar2012 $23.00 Calls @ $.26
Note: the price of Mylan was $22.75 today when the calls were sold.

Two possible overall performance results(including commissions) for the Mylan Inc.(MYL) transactions would be as follows:
Stock Purchase Cost: $11,263.95
= ($22.51*500+$8.95 commission)

Net Profit:
(a) Options Income: +$117.30
= ($.26*500 shares) - $12.70 commissions
(b) Dividend Income: $0.00
(c) Capital Appreciation (If stock price unchanged at $22.51): -$8.95
+($22.51-$22.51)*500 - $8.95 commissions
(c) Capital Appreciation (If stock assigned at $23.00): +$236.05
+($23.00-$22.51)*500 - $8.95 commissions

Total Net Profit(If stock price unchanged at Mar2012 expiration): +$108.35
= (+$117.30 +$0.00 -$8.95)
Total Net Profit(If stock assigned at $23.00 at Mar2012 expiration): +$353.35
= (+$117.30 +$0.00 +$236.05)

1. Absolute Return (If stock price unchanged at Mar2012 expiration): +1.0%
= +$108.35/$11,263.95
Annualized Return (If stock price unchanged at Apr2012 expiration): +35.1%
= (+$108.35/$11,263.95)*(365/10 days)

2. Absolute Return (If stock assigned at $23.00 at Mar2012 expiration): +3.1%
= +$353.35/$11,263.95
Annualized Return (If stock assigned): +114.5%
= (+$353.35/$11,263.95)*(365/10 days)

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